Correlation Between Cheng Shin and AVerMedia Technologies

Can any of the company-specific risk be diversified away by investing in both Cheng Shin and AVerMedia Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cheng Shin and AVerMedia Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cheng Shin Rubber and AVerMedia Technologies, you can compare the effects of market volatilities on Cheng Shin and AVerMedia Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cheng Shin with a short position of AVerMedia Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheng Shin and AVerMedia Technologies.

Diversification Opportunities for Cheng Shin and AVerMedia Technologies

0.18

Correlation Coefficient

Cheng Shin  AVerMedia Technologies

Average diversification

The 3 months correlation between Cheng and AVerMedia is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cheng Shin Rubber and AVerMedia Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVerMedia Technologies and Cheng Shin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cheng Shin Rubber are associated (or correlated) with AVerMedia Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVerMedia Technologies has no effect on the direction of Cheng Shin i.e., Cheng Shin and AVerMedia Technologies go up and down completely randomly.

Pair Corralation between Cheng Shin and AVerMedia Technologies

Assuming the 90 days trading horizon Cheng Shin is expected to generate 2.3 times less return on investment than AVerMedia Technologies. But when comparing it to its historical volatility, Cheng Shin Rubber is 1.85 times less risky than AVerMedia Technologies. It trades about 0.05 of its potential returns per unit of risk. AVerMedia Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,295  in AVerMedia Technologies on September 29, 2024 and sell it today you would earn a total of  2,445  from holding AVerMedia Technologies or generate 106.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cheng Shin Rubber  vs.  AVerMedia Technologies

Cheng Shin Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cheng Shin Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cheng Shin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

AVerMedia Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AVerMedia Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AVerMedia Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cheng Shin and AVerMedia Technologies

The main advantage of trading using opposite Cheng Shin and AVerMedia Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheng Shin position performs unexpectedly, AVerMedia Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AVerMedia Technologies will offset losses from the drop in AVerMedia Technologies' long position.

The idea behind Cheng Shin Rubber and AVerMedia Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.